U.S. Travel Jointly Urges Congress to Expand Paycheck Protection Program

In a press briefing held today, U.S. Travel Association’s Executive Vice President of Public Affairs and Policy, Tori Barnes, joined with executives from Economic Innovation Group (EIG), International Franchise Association (IFA) and the American Hotel & Lodging Association (AHLA) to discuss deficiencies of the Paycheck Protection Program (PPP) that have become apparent.

A joint letter, signed by 20 industry associations, representing some of the country’s most deeply-affected segments, was sent on April 21, 2020, to Congressional leadership, urgently requesting structural improvements to the Small Business Administration’s PPP.

John Lettieri, President and CEO of EIG, said, “After allowing the program to run dry, Congress recently approved another tranche of funding that allowed loans to be processing again, starting this week on Monday. Nevertheless, this program’s going to run out of money very quickly, leaving millions of small businesses without even the modest lifeline that it provides.”

Lettieri continued, “The fundamental concern is that PPP is designed as a short-term, stop-gap measure to subsidize payroll expenses, when what is needed is a much larger, more flexible program that helps businesses survive a prolonged period of revenue loss and operational disruption. Otherwise, the goal of retaining workers and subsidizing payroll will be all for naught.”

“The program should allow for larger borrowing amounts that can be used across a range of necessary operational expenses with longer timelines for rehiring workers when it’s safe and appropriate to do so, stronger guardrails to prevent healthy businesses from accessing the program’s resources. As structured now, the program inadvertently guarantees the strongest benefits to the businesses that are the least affected by the crisis.”

During the briefing, industry executives pointed out some of the practical shortcomings of the PPP, as it’s currently organized, and voiced concerns that its current scope of the program simply won’t be enough to buoy America’s small businesses past the prolonged effects of COVID-19.

While all involved applauded Congress for injecting funds into the market and passing legislation quickly during an unprecedented crisis, they’re collectively encouraging lawmakers to address certain flaws that would defeat the purpose of the program.

Among the collective requests put before Congress were:

—Eliminate funding uncertainty, approve such sums as are necessary so that small businesses aren’t denied access to funding because of heavy demand, and increase borrowing limits so that businesses can withstand an extended period of lost revenues and operational disruption.

—Expand flexibility for approved use of the funding. Currently, PPP loans can only be used for payroll costs, mortgage interest payments, rent, leases and utilities. Businesses also need to be able to maintain such fixed costs as mortgage principal, business insurance, taxes, inventory and payments on existing debt. Otherwise, employees may not have a workplace to return to at all.

—Extend eligibility to non-profits. “Many non-profit entities are ineligible for relief under the current structure of the PPP, and that’s a serious oversight because local and regional travel economies are highly dependent on the work of destination marketing organizations, DMOs, many of which are classified as non-profits,” Barnes explained. “They are economic engines that drive large volumes of visitors and their spending in the local economy.”

—Amend re-hiring requirements. The law currently stipulates a fixed date of June 30, 2020, by which employers must re-hire workers. The joint appeal asks that re-hiring deadlines be made contingent on when each loan commences, and allow them a sixteen-week period instead of the eight weeks initially dictated, since no one yet knows when businesses will even be allowed to reopen.

—Do not penalize businesses if workers are unwilling to return. The PPP currently withholds loan forgiveness proportionally for the number of employees not re-hired by the deadline. However, many employees are currently receiving greater amounts in unemployment insurance payouts than they would earn at their jobs and have no incentive to return to work.

—Extend the covered period for PPP loans from the current expiration of June 30, 2020, through at least the end of the year. With shelter-in-place orders in certain states already extending well into June, the timeline being set forth under current conditions is untenable.

—Implement barriers to healthy businesses taking advantage of the program to ensure that only businesses that funds are being funneled to businesses who truly need them to survive. Require borrowers to provide some certification under threat of penalty that they meet the criteria for an organization that’s suffering significant economic harm.

“We all know that this pandemic has hit the private sector hard, but the damage to the travel industry has really been truly disproportionate. The impact of the pandemic is actually nine times worse than 9/11 and, as of today, April 30, we estimate that the economy has lost eight million travel-supported jobs,” Barnes told media members. “Before COVID, the U.S. travel industry employed 15.8 million Americans, which was one in ten jobs in the United States. U.S. travel spending is expected to drop more than half a trillion dollars this year.”

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